Investing in funds has a number of benefits over investing in shares. The major advantage of investing in a share or limited selection of shares is that if the respective shares perform really well in the market – an investor stands to make an excellent return. But what if these shares do not perform well? This is the first benefit of investing in funds:
- As a fund will invest in potentially hundreds of shares, it provides less risk in terms of volatility. The poor performance of some shares may theoretically be countered by the good performance of other shares within the fund.
- Fund manager’s expert knowledge – the manager will handle all the share picking, freeing up the time of investors.
- New opportunities. As the fund will pull together vast amounts of money from multiple investors, it potentially gives individual investors the ability to access investments that may be reserved for larger investors, such as institutional investors.